Interregional Migration, Wages and Labor Market Policy : Essays on the Swedish Model in the Postwar Period

The Swedish model is perceived as a successful framework for combining rapid labor market adjustment with low inequality. Formulated by Gösta Rehn and Rudolf Meidner and implemented from the 1950s, it has been associated with the peak in economic restructuring and interregional migration during the 1960s. However, there is little empirical evidence for this. This thesis consists of an introduction and four essays. It explores three aspects of the model from a long-run perspective: interregional migration, wage dispersion and labor market policy. Essay I uses new data to track interregional migration rates in the postwar period (1945-1985). The results show that the responsiveness of interregional migration to local labor market conditions remained stable over time; it was neither higher during the 1960s nor lower when migration declined after 1970. Essay II employs a regression-decomposition framework to analyze the evolution of wage dispersion. The results suggest that wage dispersion was stable from centralized bargaining’s introduction in 1956 to the late 1960s. Afterwards, there was a rapid decline, likely because of solidaristic bargaining. Essay III contrasts the implementation of the active labor market policy to regional policy. Following a decisive shift around 1970, the focus on north to south mobility was replaced with policies to stimulate northern employment. Declining rural support for the Social Democrats and electoral competition from the Center Party caused this shift. Finally, Essay IV is a case study about mobility subsidy usage in Västernorrland County using sources on relocation allowances from 1965, 1970 and 1975. The results indicate that in the 1960s there was strong selection into the program by young persons with good labor market prospects. However, the program’s use did not change after the regional policy shift in the early 1970s. The collective results suggest that the policies associated with the Swedish model were minor for economic restructuring patterns. The migrations of the 1960s and the decline in regional disruptions after 1970 should instead be explained by studying the consequences of structural changes, how regions were progressively affected differently and the possible role that government policies played in directing demand for labor across space